Al Jazeera America and Time Warner Cable: What Broke The Impasse?

Analysis: Making a new flavor of news programming available likely wasn't the only factor in this much-watched negotiation

For infant cable-news outlet Al Jazeera America, a carriage agreement announced today with Time Warner Cable would seem to be the answer to all its hopes: The deal gives low-rated AJA a presence in about 10 million more homes that have access to cable, and makes it more robustly available in key markets like Los Angeles, New York and Dallas – three areas that would seem key to an organization that wants to vie with Fox News Channel, CNN, MSNBC and the various broadcast networks.

But Al Jazeera’s answer raises all kinds of questions.

Given a recent Time Warner Cable crackdown that has affected networks with smaller audiences, why Al Jazeera America and why now? Is Al Jazeera paying Time Warner Cable some sort of fee that makes its carriage more digestible? And what will Time Warner Cable pay Al Jazeera in terms of per-subscriber programming fees that are typically a part of carriage agreements?

The questions, as you may guess, won’t be answered by the two organizations. A Time Warner Cable spokeswoman declined to offer details of the pact between the two and a spokeswoman for Al Jazeera America did not immediately respond to a query. But one thing is clear: this pact is probably less about the spirit of making a new flavor of news programming available to a much-desired subscriber base than it is about certain financial “i”s being dotted to make the agreement financially agreeable to both players.

Time Warner Cable has made no secret of its desire to get better value from its agreements to carry cable networks. The cable-distribution giant dropped arts network Ovation late last year, saying “steeply escalating programming costs are forcing us to closely assess each network as it comes up for renewal.” The theory has been that carriage of too many networks that fail to interest a large number of subscribers adds to consumer costs and makes the bigger programming packages Time Warner Cable is trying to sell less palatable.

That said, Time Warner Cable recently agreed to restore Ovation, after the Santa Monica, California network agreed to invest in more original programming.

This isn’t an easy time for independent cablers, the ones more likely to be affected by such a policy. How can a company that operates just one or two networks hope to compete for favorable carriage terms when titans like CBS Corp. and Walt Disney end up going toe to toe with Time Warner Cable or Cablevision over carriage pacts? In order to have heft in the marketplace, you need to own an outlet that is must-see, whether it’s a broadcast network or something that boasts a property that is in perpetual demand, such as Turner’s coverage of the NCAA men’s basketball championships. Al Jazeera is, at present, operating on a plane similar to that of Ovation or Crown Media Holdings’ Hallmark outlets.

But Al Jazeera has at least one ball in its court: This is turning out to be a fertile era for news programming. Time Warner’s CNN has made strides under its new president, Jeff Zucker. Fox News Channel recently rejiggered its lineup for the first time in over a decade. Univision and Walt Disney’s ABC News are set to launch Fusion,a cable outlet aimed at young Hispanics, on Monday. After splintering along political lines, TV news now seems to be sprouting tendrils that go after choice swaths of consumers – a development that might attract new audiences and the ad cash that typically follows them.

Look, it’s not as if Time Warner Cable and Al Jazeera America broke off talks when the network launched to about 44 million homes about two moths ago. The two have likely been quietly talking over minutiae, even as sizable distractions – the actual launch of the network and a protracted huff between the cable distributor and CBS Corp. come to mind – may have drawn each party’s gaze away from the discussion at hand.

Time Warner Cable said Thursday that it had been considering Al Jazeera America and now believes “it would be of value to our customers.” While that ostensibly would seem to be a comment on the news outlet’s programming, it could also apply to the company’s algebra of constructing subscriber packages.

The New York Times, in a report today, speculated that Al Jazeera “may” be paying Time Warner Cable fees for “marketing and advertising sales support,” though it provides no attribution for the statement. But it may be that sort of quid pro quo – you pay me for my subscribers, I pay you a little extra for getting my programming to them – that makes this deal feasible when both sides face challenges of their own.